India Finsec Ltd Management Discussions.

1. FINANCIAL PERFORMANCE AND OPERATIONAL PERFORMANCE

The Company is engaged primarily in the business of advancing loans and investing/trading in securities. We provide tailor-made services to our clients. During the Financial Year 2018-2019, under consideration the performance of the Company was remarkable. Net Profit for the year 2018-2019 recorded at Rs. 16,48,640/-and the Total Revenue for the year ended March 31,2019 is Rs. 3,68,24,329/-. The Company is planning to increase its investment strategy for the growth of the business.

2. ECONOMIC OUTLOOK

Financial year 2018-19 (FY2019) began with an expectation of higher growth as the economy seemed to have overcome the teething troubles of the nation-wide roll out of the Goods and Services Tax (GST). However, a rise in the current account deficit (CAD), concerns relating to rising non-performing assets (NPAs) and decline in liquidity coupled with hardening interest rates contributed to uncertainties around a higher GDP growth rate.

The second advance estimates of national income for FY2019 released by the Central Statistics Office (CSO) on 28 February 2019 showed that the economy could not continue the expected growth momentum. GDP growth in the third quarter of FY2019 reduced to 6.6% after clocking 8% and 7% growth in the first and second quarter of FY2019 respectively. The CSO estimates GDP growth in FY2019 at 7% compared to 7.2% in FY2018.

Gross fixed capital formation (GFCF) provided a pleasant surprise, with the share of GFCF to GDP growing to 32.3% in FY2019 (second advance estimates) versus 31.4% in FY2018 (first revised estimates). However, it is perhaps too early to expect this recent uptick in the share of GFCF to GDP to provide a definite impetus to growth.

3. OPPORTUNITIES & THREATS

There are several exciting opportunities for the company.

• Demographic changes

• Focus on Digital and Affluent customer

• Financial inclusion

• Utilize technology to provide solutions to customers

• Increase distribution strength

• Large untapped rural and urban markets

In the same way, there are threats for the company.

• Volatile environment

• Growing number of Fintech companies

• Attracting and retaining talent and training them for the right culture

• High cost of funds

• Competition

4. RISK & CONCERNS

Being a NBFC, India Finsec Limited is exposed to various types of risks like interest rate volatility, economic cycle, credit risk, market risk and operational risk. Such risks are matter of concern for every NBFC. Many of the large corporate houses and banks have also diversified into lending and lending related businesses focusing into niche segments. However, with a rise in number of players, the competition in sector has intensified and impact of stiff competition in the long needs to be observed NBFCs faces high competition from public sector, private sector and foreign banks competing in similar markets.

5. PROSPECT & OUTLOOK

The Company is confident in managing its risks by observing a conservative financial profile in investments. The Company hopes to improve its performance on the strength of its long experience and its strong emphasis to diversify risk and to maintain its quality of services for the customers. The Company has the strategy to enhance its customer base by providing qualitative services to the customers and diversify its products by new technology and enhancing its products. The management has got an exposure of the capital markets, which provides us an opportunity to make the investments profitable associated with minimum risks.

6. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

There are well-established procedures for Internal Controls for operations of the company. The finance & audit functions are well equipped with professionally experienced qualified personnel & play important roles in implementing the statutory obligations. The company has constituted Audit Committee for guidance and proper control of affairs of the company.

7. HUMAN RESOURCES

Human Resources are highly valued assets at India Finsec Limited. The company seeks to attract, retain and nurture technical & managerial talent across its operations and continues to create, sustain the environment that brings out the best in our people with emphasis on training, learning & development. It aims at career progression and fulfilling satisfactory needs. Performance is recognized and rewarded through up gradation & job enrichment, performance incentives.

8. SEGMENT-WISE PERFORMANCE

The Company is exclusively engaged in the Non-Banking Finance activities and revenues are mainly derived from this activity. The details with regard to segment performance of the Company are mentioned in the notes forming part of the Financial Statements at Note No. 26.

9. SIGNIFICANT CHANGES IN FINANCIAL RATIO

During the year following significant changes which are more than 25% as compared to the previous year have been taken place in the financial ratios on a standalone basis and consolidated basis:

Standalone basis:-

Financial Ratio Standalone Change (%) Reason for change
FY 2018-19 FY 2017-18
Inventory Turnover 1.19 1.78 -33% The Companys loan portfolio has been decreased due to investment in its subsidiary to support the principal business activities of its subsidiary which resulted in the decrease of financial ratios of the Company.
Interest Coverage Ratio 4.04 5241.28 -99.92%
Current Ratio 1.63 99.16 -97.53%
Return on Net Worth 0.37% 2.75% -2.38 %

Consolidated basis:-

Financial Ratio Consolidated Change (%) Reason for change
FY 2018-19 FY 2017-18
Inventory Turnover 1.19 1.78 -33% The Companys loan portfolio has been decreased due to investment in its subsidiary to support the principal business activities of its subsidiary which resulted in the decrease of financial ratios of the Company.
Interest Coverage Ratio 5.01 859.46 -99.42%
Current Ratio 1.54 44.11 -96.50%
Return on Net Worth 4.23% 4.16% 0.07 %

RESPONSIBILITY FOR THE MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Board of Directors have reviewed the Management Discussion and Analysis prepared by the Management, and the Independent Auditors have noted its contents. Statement in this report of the Companys objective, projections, estimates, exceptions, and predictions are forward looking statements subject to the applicable laws and regulations. The statements may be subjected to certain risks and uncertainties. Companys operations are affected by many external and internal factors which are beyond the control of the management. Thus the actual situation may differ from those expressed or implied. The Company assumes no responsibility in respect of forward looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.

By the Order of the Board
For India Finsec Limited
Gopal Bansal Mukesh Sharma
Date: 30.05.2019 Managing Director Director
Place: Delhi DIN-01246420 DIN-00274217